Docstoc

A Guide To Doing Business In Alabama

Document Sample
A Guide To Doing Business In Alabama Powered By Docstoc
					    Alabama’s
     Answers




A Guide To Doing Business
       In Alabama
                        SMALL BUSINESS GUIDE

                                             TO


                         DOING BUSINESS IN ALABAMA


                The Book of Information for the Alabama Business Entrepreneur



                                          Version 4.1
                                          April 2010




          ALABAMA SMALL BUSINESS DEVELOPMENT CENTER NETWORK
                         Office of the State Director
                         The University of Alabama
                                 Box 870396
                           Tuscaloosa, AL 35487
                               (205) 348-1582
                              www.asbdc.org

                                              and




                        OFFICE OF SMALL BUSINESS ADVOCACY
                             Department of Industrial Relations
                                 Industrial Relations Bldg.
                                     649 Monroe Street
                                  Montgomery, AL 36131
                             (334) 242-0400 or 1-800-248-0033
                                    www.alabamausa.org
                                   http://dir.alabama.gov


     The Alabama SBDC Network is funded in part through a cooperative agreement with the
U. S. Small Business Administration. All opinions, conclusions, or recommendations expressed are
             those of the authors and do not necessarily reflect the views of the SBA.
INTRODUCTION........................................................................................................................................................ 4
I. HOW TO START A BUSINESS IN ALABAMA ................................................................................... 5
   A. BUSINESS START-UP CHECKLIST ............................................................................................ 5
   B. FROM IDEA TO PERSONAL COMMITMENT.......................................................................... 6
   C. TECHNICAL & MANAGERIAL EXPERIENCE NEEDED....................................................... 7
   D. WRITING A BUSINESS PLAN ...................................................................................................... 8
   E. CHOOSING A LEGAL STRUCTURE......................................................................................... 10
   F. SAMPLE DOCUMENTS................................................................................................................ 14
   G. TEN STEPS TO BUSINESS SUCCESS ....................................................................................... 17
   H. FEASIBILITY CHECKLIST ........................................................................................................ 18
II. START-UP GUIDELINES ................................................................................................................................ 20
   A. REGULATIONS AND PERMITS................................................................................................. 20
   B. AGENCY REFERENCE LIST ...................................................................................................... 21
   C. ACCOUNTING & RECORDKEEPING ...................................................................................... 24
   D. ACCOUNTING SYSTEMS............................................................................................................ 25
   E. INSURANCE ................................................................................................................................... 26
   F. READINESS CHECKLIST............................................................................................................ 27
III. GUIDE TO BUSINESS TAXES......................................................................................................................... 30
   A. INTRODUCTION TO BUSINESS TAXES.................................................................................. 30
   B. TAXES ON THE BUSINESS ITSELF .......................................................................................... 31
   C. SALES, USE AND BUSINESS TAX ............................................................................................. 32
   D. PROPERTY TAX............................................................................................................................ 32
   E. INDIVIDUAL AND CORPORATE TAX ..................................................................................... 33
   F. EMPLOYMENT TAX..................................................................................................................... 34
   G. TAX NUMBERS ............................................................................................................................. 36
   H. CHILD LABOR PROVISION....................................................................................................... 38
IV. SMALL BUSINESS ASSISTANCE .................................................................................................................. 39
   A. ALABAMA SBDC NETWORK .................................................................................................... 39
   B. OFFICE OF SMALL BUSINESS ADVOCACY (OSBA) ........................................................... 41
   C. ALABAMA TOURISM DEPARTMENT (ATD)......................................................................... 42
   D. OFFICE OF MINORITY BUSINESS ENTERPRISES (OMBE) .............................................. 42
   E. DEPARTMENT OF AGRICULTURE AND INDUSTRY ......................................................... 43
   F. ALABAMA COOPERATIVE EXTENSION SERVICE ............................................................. 43
   G. MINORITY BUSINESS DEVELOPMENT AGENCY............................................................... 44

                                                                                  2
   H. ALABAMA CHAMBERS OF COMMERCE .............................................................................. 45
   I. ALABAMA CAREER CENTER SYSTEM.................................................................................. 45
   J. SERVICE CORPS OF RETIRED EXECUTIVES ...................................................................... 47
   K. ENVIRONMENTAL PROTECTION AGENCY (EPA)............................................................. 47
   L. OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION (OSHA).......................... 48
V. SMALL BUSINESS FINANCING ..................................................................................................................... 48
  A. FINANCING OVERVIEW ........................................................................................................................ 48
  B. FINANCING AGENCIES AND PROGRAMS ..................................................................................... 48




                                                                         3
INTRODUCTION

This document is intended to provide basic, introductory information to individuals who are
considering starting a business in the State of Alabama. While no one publication can answer
every question for every kind of proposed business, this publication can serve as a guide to those
sources of information which are needed for a successful business venture.

The Alabama Small Business Development Center Network and other state agencies are
available to provide a complete spectrum of services to help the entrepreneur to establish and
operate a successful small business. The services of the Alabama SBDC Network are free for
qualified small businesses and our technical assistance and counseling can make the difference in
whether a business venture is successful or not.

This guide is organized into five major sections:

       I.         How to Start a Business in Alabama
       II.        Start- Up Guidelines
       III.       Guide To Business Taxes
       IV.        Small Business Assistance
       V.         Small Business Financing

This book provides information for the entrepreneur to build on. However, before engaging in
any business venture, it is advisable to seek advice from a lawyer, an accountant and other
business professionals. They can advise you on the many technical aspects of starting and
operating a business that this book does not attempt to address.

We encourage you to research your proposed venture thoroughly and seek assistance from every
available resource.

I wish you the best of luck in your new venture.


                                                        M. William Campbell, Jr.
                                                        State Director
                                                        Alabama SBDC Network




                                                   4
I. HOW TO START A BUSINESS IN ALABAMA

A. Business Start-up Checklist

B. From Idea to Personal Commitment

C. Technical and Managerial Experience Needed

D. Writing A Business Plan

E. Choosing A Legal Structure

F. Sample Documents

      1. The Balance Sheet
      2. The Income Statement
      3. The Cash Flow Statement

G. Ten Steps to Business Success

H. Feasibility Checklist


A. BUSINESS START-UP CHECKLIST
There are a number of steps which should be taken before anyone starts a small business in
Alabama. Detailed descriptions of all the areas involved in planning a business venture are
discussed in the following sections of this book. The following checklist is designed to be used
as a general reference guide by the business owner to adequately plan and prepare for entry into
the world of entrepreneurship.


START-UP CHECKLIST

__ Prepare a written business plan complete with financial statements

__ Decide whether you wish to operate as a sole proprietorship, partnership or corporation

__ Establish a source of adequate and reliable financing

__ Check on zoning ordinances

__ Select a suitable location

__ Retain an attorney and CPA, if appropriate

                                                5
__ Acquire necessary licenses and permits

__ Get tax ID number and forms; follow other tax requirements

__ Choose a record keeping system and method of inventory control

__ Open bank accounts

__ Arrange for utilities, telephone and other services

__ See insurance agent for full range of coverage


B. FROM IDEA TO PERSONAL COMMITMENT
The main message of this manual is to stress the importance of prior planning and thinking
through your idea. Prior planning encourages systematic thinking by management and leads to
the development of proper controls. The result is a better overall preparedness and a more vivid
sense of the interacting responsibilities.

The first step in the process is generating your idea. This is only the very first step; many things
remain to be done before you can expect to realize and make money from the idea. At the
minimum level your ideas will need to pass several tests to determine whether or not it is an
original idea, whether the idea can be produced and distributed profitably, and whether or not
your idea can be protected. This seems simple enough until you examine the underlying
questions that must be resolved. For example, to determine the commercial merit of an idea the
following areas should be considered:

      Legality                                           Distribution
      Safety                                             Perceived Functions
      Environmental Impact                               Existing Competition
      Societal Impact                                    Potential Sales
      Potential Market                                   Development Status
      Product Life Cycle                                 Investment Costs
      Usage Learning                                     Trend of Demand
      Product Visibility                                 Product Line Potential
      Service                                            Need
      Durability                                         Promotion
      New Competition                                    Appearance
      Functional Feasibility                             Price
      Production Feasibility                             Protection
      Stability of Demand                                Pay-Back Period
      Profitability                                      Consumer/User Compatibility
      Marketing Research                                 Product Interdependence
      Research and Development


                                                 6
It will take a great deal of personal commitment to turn your idea into reality. Small business
owners must be willing to work exceptionally long hours and often forego financial rewards in
the early stages of their operation. All too many businesses fail, but proper planning and
dedication will certainly increase your chances for a successful venture.

C. TECHNICAL & MANAGERIAL EXPERIENCE NEEDED
One of the most common mistakes in starting a business is trying to do so without the necessary
training and experience. Before you start a business, you should ask yourself whether you
actually have the background, experience and training that is required. For example, a retailer
would need some expertise in management, sales and buying. The management experience
would need to include personnel, record keeping and marketing, as well as other skills.

If you do not already have this experience, how do you get it? Generally, it is best to work for a
time in a company similar to your proposed business. This gives you a closer look at what that
type of business entails without risking your investment during the learning period. Another
suggestion for gaining expertise is to take courses at your local college or university. Most area
schools offer both credit and continuing education courses. Various seminars and workshops are
also offered throughout the year.

There are many publications available that offer help and insight to many of the day-to-day
problems that a small business owner faces. The Small Business Administration issues a wide
range of management and technical publications to assist the small business owner. One of the
most useful is the Alabama Small Business Resource Guide, which is published annually and is
available from the SBA Alabama District Office, the SBA website www.sba.gov and from SBA
resource partners in Alabama including the Alabama SBDC Network, Women’s Business
Centers, and SCORE. To obtain a list of the available publications write:

The Government Printing Office also publishes several useful books that are available by
writing:
              Government Printing Office
              Superintendent of Documents
              U. S. Government Printing Office
              P.O. Box 371954
              Pittsburgh, PA 15250-7954
              (866) 512-1800
               http://bookstore.gpo.gov/




                                                7
D. WRITING A BUSINESS PLAN

Introduction

One of the most important early steps to take in starting or expanding a business is to write a
business plan. There are three major reasons why you should take the time to create a written
business plan.

The first reason is that the process of putting a business plan together, including the thought you
put in before beginning to write the plan, forces you to take an objective, critical and
unemotional look at your business project in its entirety.

A second advantage that comes with having a written business plan is that the finished product,
your business plan, is an operating tool which will help you manage your business and provides
a means to measure your success.

And third, a properly prepared business plan also provides the information that must be
presented to a bank or other investors before a credit decision is made. Since many businesses
only start or expand through borrowed monies, the presentation of reliable and complete
information in a business plan is essential.


What A Bank Looks For In A Business Plan

The Business Plan is an excellent tool for bank presentations when financing is needed. A good
business plan tells the banker that the applicant has put a great deal of thought and effort into this
decision. A well-presented business plan will let the banker know that he is dealing with a
serious, well informed prospect, instilling more faith in you as an entrepreneur.

If a business plan is to be submitted to a bank, it is important to realize how a banker analyzes a
business plan and what questions a banker will ask during this analysis. A banker's job is to
assess the degree of risk in each proposed loan and to be satisfied that the loan can be repaid by
the borrower while still allowing the businesses to operate profitably. A banker does this by
analyzing a number of things:

          The Nature of the Business
          The Purpose of the Loan
          The Amount of the Loan
          The Ability to Repay the Loan
          The Character/Management Skills of the Business Owner

To convince a banker or investor of the merits of a loan request, a borrower must present
complete, well organized information which addresses these and other concerns. It is important
to remember that the proper packaging of a loan proposal can be an important step in getting it
approved.

                                                  8
Suggested Business Plan Outline

I.     Cover Letter
       A. Name of Business
       B. Name of Principals
       C. Address of Business
       D. Telephone Number of Business

II.    Statement of Purpose
       A. Brief Statement of the Business Plan Objectives

III.   The Business
       A. Description of the Business
       B. The Market
       C. Competition
       D. Location of the Business
       E. Management
       F. Personnel
       G. Application and Expected Effect of Loan or Investment
       H. Summary

IV.    Financial Data
       A. Sources and Applications of Funding
       B. Capital Equipment List
       C. Balance Sheet
       D. Breakeven Analysis
       E. Pro-Forma Income Projections (Profit & Loss Statements)
                  Three-Year Summary
                  Detail by Month, First Year
                  Detail by Quarter, Second and Third Year
                  Notes of Explanation
       F. Pro-Forma Cash Flow
                  Three Year Summary
                  Detail by Month, First Year,
                  Detail by Quarter, Second and Third Year
                  Notes of Explanation
       G. For an Existing Business
                  Budget Deviation Analysis
                  Historical Financial Reports
                  Balance Sheets for Past Three Years
                  Tax Returns

V.     Supporting Documents
       A. Personal Resumes and Financial Statements
       B. Job Descriptions
       C. Credit Reports
       D. Letters of Reference
       E. Letters of Intent
       F. Copies of Leases, Contracts and Other Relevant Legal Documents
                                                9
E. CHOOSING A LEGAL STRUCTURE
Once you have decided to start a business, you must decide what type of business entity to use.
There are many legal and tax considerations, which will enter into a sound decision. These legal
considerations can become very involved and it is advised that you consult an attorney to help
you determine the appropriate structure.

There are five principle forms of business structure: the Proprietorship, the Partnership, the
Corporation, Subchapter S Corporation, and the Limited Liability Company (LLC). The
decision should be based on your specific circumstances, goals and needs. These structures,
along with their advantages and disadvantages, are listed below:

The Sole Proprietorship

The sole proprietorship is usually defined as a business which is owned and operated by one
person. To establish a sole proprietorship, you need only obtain whatever licenses you need and
begin operation.

Advantages

           Ease of formation
           Sole ownership of profits
           One owner has control and decision-making power
           Flexibility in day-to-day management
           Relative freedom from government intervention

Disadvantages

           Unlimited liability - this extends to all of the proprietor's assets including the home and
           car, but may be lessened by proper insurance coverage
           Unstable business life - the business may be terminated upon the death of the owner
           Less available capital
           Difficult to obtain long-term financing
           Relatively limited viewpoint and experience

The Partnership

The Uniform Partnership Act, adopted by many states, defines a partnership as "an association of
two or more persons to carry on as co-owners of a business for profit." Though not specifically
required by the Act, written Articles of Partnership are customarily executed. These articles
outline the contribution by the partners into the business (whether financial, material or
managerial) and generally delineate the roles of the partners in the business relationship.
Some of the characteristics that distinguish a partnership from other forms of business
organizations are the limited life of a partnership, unlimited liability of at least one partner, co-
ownership of the assets, sharing of managerial duties and a sharing of the profits.


                                                  10
Advantages

          Ease of formation
          Direct rewards
          Growth and performance facilitated
          Flexibility in decision making
          Relative freedom from government control and special taxation

Disadvantages

          Unlimited liability of at least one partner
          Unstable life - elimination of either partner constitutes automatic dissolution of the
          partnership
          Relative difficulty in obtaining large sums of capital
          Firm bound by the acts of just one partner as agent
          Difficulty of disposing of partnership interest

The Corporation

The corporation is by far the most complex of the business structures. A corporation is a distinct
legal entity. That is, it is separate from the individuals who own it.

A corporation usually is formed by the authority of a state government. Corporations which do
business in more than one state must comply with federal laws regarding interstate commerce
and with the state laws, which may vary considerably.

The procedure ordinarily required to form a corporation is that first a subscription for capital
stock must be taken and a tentative organization created. Then, approval must be obtained from
the Secretary of State in the state in which the corporation is to be formed. This approval is in
the form of a charter for the corporation, stating the limitations of the particular enterprise.

Advantages

          Limitations of the stockholders liability to a fixed amount of investment
          Ownership is readily transferable
          Separate legal existence
          Stability and relative permanence of existence
          Relative ease of securing capital
          Delegated authority
          The ability to draw on the expertise and skills of many

Disadvantages

          Activities are limited by the charter and various laws
          Minority stockholders may be exploited
          Extensive government regulations and required reports

                                                11
           Less financial incentives for the manager
           Double taxation - income tax on corporate net income (profit) and also on salaries and
           dividends

The Subchapter S Corporation

The Subchapter S Corporation is a legal corporation that is afforded special tax treatment under
Subchapter S of the Internal Revenue Code. The characteristics of the S corporation are; under
state law S corporations retain the normal features of a corporation, to include limited liability,
but for federal tax purposes it is treated much like a partnership.

The S Corporation is absolved from payment of taxes; hence the stockholders report corporate
income, loss, deductions and credits on their individual tax returns. In most all other aspects, the
S Corporation operates in compliance with state and federal laws relating to corporations, just as
a regular corporation.

Advantages

           Limited liability of stockholders
           Ownership is readily transferable
           Separate legal existence
           Taxed similar to partnership - profits pass through the corporation untaxed, but are
           taxed as individual stockholder income, loss, deductions and credits.

Disadvantages

           Activities are limited by the charter and various laws
           Extensive government regulations and required reports
           No more than 35 stockholders
           S Corporation cannot own more than 80% of any other corporation
           Stockholders must be individuals, not entities
           Stockholders must be resident citizens
           Only one class of stock may be issued
           The law prohibits S incorporation for the sole reason of obtaining limited liability
           status
LLC’s and LLP’s

The Alabama Limited Liability Company Act (93-724), passed in May 1993 by the Alabama
Legislature, provides for the formation of a new business entity in Alabama. The act became
effective on October 1, 1993. If properly structured, an Alabama Limited Liability Company
(LLC) will offer the beneficial tax status of a partnership and provide all of its members with
limited liability. It is treated like a corporation for limited liability purposes, but for federal tax
purposes it is treated as a partnership.




                                                   12
A summary of the features of the Limited Liability Company (LLC) as well as the Limited
Liability Partnership (LLP) is available at the web address below.

For more information, go to http://www.sos.state.al.us/BusinessServices/LLC.aspx.


Procedures For Incorporation

The following procedures apply to the formation of an Alabama (domestic) for-profit corporation
under Title 10-2A, Code of Alabama, 1975, as last amended.

1. The proposed name of the corporation must be reserved with the Corporate Section of the
   Office of the Secretary of State. If the proposed name is available, a Certificate of Name
   Reservation will be issued. This requirement may be accomplished by writing or calling the
   Corporate Section at (334) 242-5324. Alabama law requires that the name contain the word
   'corporation' or 'incorporated' or an abbreviation of one such word. Additionally, there is a
   $10.00 fee for the certificate, which is collected when the Articles of Incorporation are filed.

2. After receiving the Certificate of Name Reservation, the Articles of Incorporation may be
   filed. The necessary forms can be obtained and additional questions answered by writing or
   calling the following office:

                          Office of the Secretary of State
                          Corporate Section
                          P.O. Box 5616
                          Montgomery, Alabama 36103-5616
                          (334) 242-5324
                          http://www.sos.state.al.us/BusinessServices/Corporations.aspx




                                                13
F. SAMPLE DOCUMENTS

                                            THE BALANCE SHEET
The Balance Sheet is a measure of the solvency of the business and the degree of the owner's investment, which, in
the last analysis, is the "cushion" that protects creditors. Illustrated below is a typical balance sheet format
(applicable to any type of business).

Name of Company

Balance Sheet As Of ___________________

CURRENT ASSETS:
     Cash on Hand and in Banks                 $        _________
     Accounts Receivable                                _________
     Notes Receivable, Trade                            _________
     Notes Receivable, Other                            _________
     Inventory                                          _________
     Marketable Securities                              _________
     Other Current Assets                               _________
   TOTAL CURRENT ASSETS:                                _________

LONG-TERM ASSETS:
     Land, Land improvements, Buildings                 _________
     Machinery & Equipment                              _________
     Other Assets (attach list if needed)               _________
     Deferred, Prepaid, Expenses                        _________
     Intangible Assets                                  _________
   TOTAL LONG-TERM ASSETS:                              _________
   TOTAL ASSETS:                                        _________

CURRENT LIABILITIES:
     Notes Payable, Banks                               _________
     Notes Payable, Other                               _________
     Accounts Payable, Current                          _________
     Accounts Payable, Past Due                         _________
     Accrued Federal, State Income Taxes                _________
     Other Accrued Expenses                             _________
     Current Portion Long-Term Debt                     _________
     Current Portion Long-Term Lease                    _________
     Other Current Liabilities                          _________
   TOTAL CURRENT LIABILITIES:                           _________

LONG-TERM LIABILITIES:
     Mortgage Debt due after 1 year                     _________
     Equipment Debt due after 1 year                    _________
     Lease Agreement beyond 1 year                      _________
     Other Long-Term Debt                               _________
   TOTAL LONG-TERM LIABILITIES:                         _________

NET WORTH:
     Capital Account (Corporate Only)                   _________
      Preferred Stock                                   _________
      Common Stock                                      _________
     Capital Surplus                                    _________
     Retained Earnings                                  _________
   TOTAL NET WORTH:                                     _________
   TOTAL LIABILITIES AND NET WORTH:                     _________


NOTE: In order to complete the Balance Sheet properly, Total Assets must equal Total Liability plus Net Worth.




                                                       14
                                         THE INCOME STATEMENT

The Income Statement (Profit and Loss) records all income and expenses of the business during a specified time
period and is the accepted method of determining profits and losses. The Internal Revenue Service requires all
businesses to submit this report at the end of each year.

                                               Profit and Loss Statement

From: __________________________ to ________________________

Sales or Gross Receipts (1)                                 __________

Less Cost of Goods Sold (2)                                 __________

Gross Profit                                                __________

Less Operating Expenses (3)
      Rent                                                  __________
      Depreciation                                          __________
      Repairs & Maintenance                                 __________
      Salaries & Wages                                      __________
      Payroll Taxes & Fringe Benefits                       __________
      Taxes, Licenses & Fees                                __________
      Insurance                                             __________
      Accounting, Legal and Professional Fees               __________
      Bad Debts                                             __________
      Telephone                                             __________
      Utilities                                             __________
      Supplies                                              __________
      Security                                              __________
      Auto and Truck                                        __________
      Advertising and Promotion                             __________
      Interest                                              __________
      Miscellaneous                                         __________

Total Expenses                                              __________

Net Profit Before Taxes                                     __________

Federal Income Taxes (Corporation Only)                     __________

Net Profit (or Loss) (4)                                    __________


    (1) Sales or Gross Receipts - represents total amount of money that the business makes from the sale of its
         merchandise, less discounts and refunds.

    (2) Cost of Goods Sold- the cost of the merchandise that the business sells. These costs differ with each type of
         business.

    (3) Operating Expenses - all business costs other than the costs of the merchandise.

    (4) Net Profit (loss) - sales less cost of goods sold less operating expenses less tax.



                                                           15
                                              THE CASH FLOW STATEMENT
The Cash Flow Statement is the most critical planning tool for a new or growing business. It shows how much cash
will be needed, when it will be needed and where it will come from. It attempts to budget monthly cash needs, and
shows the flow of cash into the business from sales, collection of receivables; and out of the business through
payment of expenses and loans over a period of time. The banker uses this information to analyze possible
shortfalls of cash and as a guide to borrowing needs. Your statement should show Cash Flow over the full twelve-
month period. This Cash Flow Statement (reprinted form SBA Management Aid 1.001 the ABC's of Borrowing)
represents a cash flow statement for a three-month period.

Cash Budget

(For three months, ending March 31, 20 _____)
                                                               January            February          March
                                                               Budget    Actual   Budget   Actual   Budget   Actual
Expected Cash Receipts

1.    Cash sales                                               ______    ______   ______   ______   ______   ______
2.    Collections on accounts receivable                       ______    ______   ______   ______   ______   ______
3.    Other income                                             ______    ______   ______   ______   ______   ______
4.    Total cash receipts                                      ______    ______   ______   ______   ______   ______

Expected Cash Payments

5.  Raw materials                                              ______    ______   ______   ______   ______   ______
6.  Payroll                                                    ______    ______   ______   ______   ______   ______
7.  Other factory expenses (including maintenance)             ______    ______   ______   ______   ______   ______
8.  Advertising                                                ______    ______   ______   ______   ______   ______
9.  Selling expense                                            ______    ______   ______   ______   ______   ______
10. Administrative expense (including salary of
         owner-manager)                                        ______    ______   ______   ______   ______   ______
11. New plant and equipment                                    ______    ______   ______   ______   ______   ______
12. Other payments (taxes, including estimated income
         tax; repayment of loans; interest; etc.)              ______    ______   ______   ______   ______   ______
13. Total cash payments                                        ______    ______   ______   ______   ______   ______

14. Expected Cash Balance at beginning of the month            ______    ______   ______   ______   ______   ______

15. Cash increase or decrease (item 4 minus item 13)           ______    ______   ______   ______   ______   ______
16. Expected cash balance at end of month
        (item 14 plus item 15)                                 ______    ______   ______   ______   ______   ______
17. Desired working cash balance                               ______    ______   ______   ______   ______   ______
18. Short-term loans needed (item 17 minus item 16,
        if item 17 is larger)                                  ______    ______   ______   ______   ______   ______
19. Cash available for dividends, capital cash
        expenditures, and/or short investments (item
        16 minus item 17, if item 16 is larger than
        item 17)                                               ______    ______   ______   ______   ______   ______

Capital Cash

20. Cash available (item 19 after deducting dividends, etc.)   ______    ______   ______   ______   ______   ______
21. Desired capital cash (item 11, new plant equipment)        ______    ______   ______   ______   ______   ______
22. Long-term loans needed (item 21 less 20, if item 21 is
        larger than item 20)                                   ______    ______   ______   ______   ______   ______


By combining the monthly cash flow reports with an income statement for the year and your beginning and ending
balance sheet, you will produce a statement of annual cash flow from operations. The monthly cash flow statement
shows your need for seasonal borrowing, while the annual cash flow from operations shows the need for longer-term
funds.




                                                               16
G. TEN STEPS TO BUSINESS SUCCESS

1.    Develop an effective and detailed business plan. It is the blueprint to your
      success. Update your business plan to reflect changes as they occur. A good plan should
      be flexible enough to adapt to a changing environment. Include cash flow projections in
      your business plan; insufficient working capital can be hazardous.

2.    To be successful in small business one must be a entrepreneur, a manager and an
      technician.

3.    Take pride in your business; it is an extension of yourself. Understand your
      weaknesses and strengths, your product and the market. Provide your customers with the
      right product, at the right time.

4.    Know your competition, your industry and your target market inside and out. Do not
      rely on assumptions and hunches.

5.    Trust yourself and your own judgment but take the time to truly know your market
      well - and the products it values. To stay one step ahead, constantly evaluate your
      business and its role in the market.

6.    Serve the needs of the customers. Be sensitive to their needs, know how to reach
      them, and most of all, know what will convince them to buy your product or service.
      Advertising is essential.

7.    Know your limits. Are you willing to work day and night to make it work? Don't do it
      all yourself. Get moral support and the right kind of help to run your business.
      Professional consultants can help you tap the full resources of your business.

8.    Carefully select your staff. They are the faces that people associate with your
      business. Train them to perform the job to your satisfaction and reward them when the job
      is well done.

9.    Treat employees as individuals. Each has their own strengths, weaknesses and
      preferences.

10.   Read relevant newspapers and magazines daily; become familiar with the
      financial section. Keep up-to-date so that you may understand the big picture.




                                               17
H. FEASIBILITY CHECKLIST
This feasibility checklist is designed to help the pre-business person determine whether his idea
represents a valid business opportunity. The high failure rate of new businesses indicates that
relatively few new businesses result in successful ventures. Too many entrepreneurs strike out
on a business venture absolutely convinced of its merits without having adequately evaluated its
real potential.

I.          PERSONAL CONSIDERATIONS:                                                                                                           Yes        No
       1. Do you enjoy working long hours? .................................................................................................       ____   ____
       2. Do you have self-discipline & willpower? ......................................................................................          ____   ____
       3. Do you meet deadlines easily? ........................................................................................................   ____   ____
       4. Do you work well under pressure? ..................................................................................................      ____   ____
       5. Will you jeopardize your home? .....................................................................................................     ____   ____
       6. Do you have the necessary physical strength? ................................................................................            ____   ____
       7. Does your family support this venture?...........................................................................................        ____   ____
       8. Do you have a back-up plan? ..........................................................................................................   ____   ____

II.         EXPERIENCE AND SKILLS:
       1. Does your idea make use of your skills? .........................................................................................        ____   ____
       2. Does your idea require skills you do not have?...............................................................................            ____   ____
       3. Can you find experienced personnel at an affordable rate?.............................................................                   ____   ____
       4. Are you experienced in this line of work?.......................................................................................         ____   ____
       5. Do you have managerial experience? ..............................................................................................        ____   ____
       6. Are you able to interpret financial data? .........................................................................................      ____   ____
       7. Are you familiar with tax regulations? ............................................................................................      ____   ____
       8. Do you know bookkeeping and accounting?...................................................................................               ____   ____

III.        PLANNING AND PREPAREDNESS:
      1. Have you already written a formal business plan? ..........................................................................               ____   ____
      2. Do you know exactly what services or products will be offered? ...................................................                        ____   ____
      3. Do you know what customers to target? .........................................................................................           ____   ____
      4. Have you arranged for a business location? ....................................................................................           ____   ____
      5. Do you have a list of potential suppliers?........................................................................................        ____   ____
      6. Do you know your competitors' businesses well? ...........................................................................                ____   ____
      7. Have you arranged for insurance? ...................................................................................................      ____   ____
      8. Do you have a business license? .....................................................................................................     ____   ____
      9. Have you investigated advertising & its cost?.................................................................................            ____   ____
     10. Have you hired a competent staff? ..................................................................................................      ____   ____

IV.         REQUIREMENTS FOR SUCCESS:
       1. Will your proposed business meet needed services? ....................................................................... ____                  ____
       2. Is there already a similar business in your community? .................................................................. ____                  ____
       3. Can your business successfully compete against its competition
            because of an advantage such as lower prices or superior service? .............................................. ____                         ____




                                                                                18
V.         DETRIMENTAL FLAWS:                                                                                                                Yes        No
      1. Are you affected by any monopolies, shortages, or restrictions that prevent
          you from obtaining any necessary items at an affordable price?...................................................                      ____   ____
      2. Are capital requirements for starting up or continuing operations excessive? ................................                           ____   ____
      3. Is adequate financing going to be difficult to obtain? .....................................................................            ____   ____
      4. Does your business adversely affect the environment? ...................................................................                ____   ____
      5. Is your business completely legal? ..................................................................................................   ____   ____
      6. Are there any factors that prevent effective marketing?..................................................................               ____   ____

VI.        INCOME:
      1. Will your business provide you with your desired level of income?...............................................                        ____   ____
      2. Do you know your industry's averages - including gross profit,
          expenses, and net profit as a percent of sales?...............................................................................         ____   ____
      3. Do you know your industry's inventory turnover rate? ...................................................................                ____   ____
      4. Have you prepared an income statement to determine the level of sales
          necessary to support your desired income level?...........................................................................             ____   ____
      5. From a practical standpoint, can you support the level of sales in question 4? ...............................                          ____   ____


This checklist is a tool to help the entrepreneur determine if there are any major obstacles that will prevent the
business from becoming successful. Each NO answer should be carefully reviewed to determine how great an
impact it will have on the business and to see if anything can be done to correct the problems it may create.




                                                                               19
II. START-UP GUIDELINES
A.    Regulations and Permits

B.    Agency Reference List

C.    Accounting and Recordkeeping

D.    Accounting Systems

E.    Insurance

F.    Readiness Checklist


A. REGULATIONS AND PERMITS
When determining what licenses and permits are required for your specific business, it is
essential to determine what federal, state, county and city requirements must be met. This
information should be obtained very early in the research process to determine if a particular
type of business is allowable in the area you are considering.

Every person, firm, company, corporation or association engaged in any business, vocation,
occupation or profession must obtain a state license, and a county license when required.

Any questions concerning privilege license laws or store license laws should be directed to:

             Alabama Department of Revenue
             Sales, Use & Business Tax Division
             P.O. Box 327550
             Montgomery, AL 36132-7550
             (334) 353-7827
             http://www.ador.state.al.us/licenses/index.html

The following page contains a reference list of agencies and their phone numbers that you can
contact to obtain specific information on permits and regulations relating to your particular
business.

In addition to this list, it is recommended that entrepreneurs engage the help of a lawyer,
preferably a lawyer familiar with the process of starting new businesses. The legal counsel could
prove to be invaluable in determining the proper licenses and permits that will be required.




                                               20
B. AGENCY REFERENCE LIST
FEDERAL

Agencies:

Environmental Protection Agency (General Information) .......................................(800) 241-1754
Equal Employment Opportunity Commission (Birmingham)..................................(205) 731-0082
Department of Immigration & Naturalization ..........................................................(202) 514-4316
Federal Identification Number (Form SS-4).............................................................(800) 829-3676
Federal Information Center.......................................................................................(800) 333-4636
Federal Reserve Bank of Atlanta ..............................................................................(404) 498-8500
Internal Revenue Service ..........................................................................................(800) 829-1040
National Climatic Center (North Carolina)...............................................................(828) 271-4800
National Flood Insurance Program ...........................................................................(800) 638-6620
Occupational Safety and Health Administration (Birmingham) ..............................(205) 731-1534
Occupational Safety and Health Administration (Mobile) .......................................(251) 441-6131
Patents and Trademarks Information (Virginia) .......................................................(800) 786-9199
Social Security Administration .................................................................................(800) 772-1213
Tennessee Valley Authority (Tennessee) .................................................................(865) 632-2101
Technical Library - Muscle Shoals ...........................................................................(256) 386-2872
U.S. Census Bureau (Maryland) ...............................................................................(301) 457-4608
U.S. Copyright Information (Washington) ...............................................................(202) 707-3000
U.S. Department of Commerce (Birmingham).........................................................(205) 731-1331
U.S. Department of Labor, Wage/Hour Division (Birmingham) .............................(205) 731-1305
U.S. Forestry Department .........................................................................................(202) 205-1760
U.S. Small Business Administration (Birmingham).................................................(205) 290-7101
U.S. Veterans Administration (Montgomery) ..........................................................(334) 213-3407

STATE

Agricultural Center Board (Montgomery) ................................................................(334) 242-5597
Agricultural Experiment Station (Auburn) ...............................................................(334) 844-2345
Alabama Archives and History (Montgomery) ........................................................(334) 242-4441
Alabama Attorney General (Montgomery)...............................................................(334) 242-7300
Alabama Building Commission (Montgomery) .......................................................(334) 242-4082
Alabama Bureau of Tourism and Travel (Montgomery) ..........................................(334) 242-4169
Alabama Commission on Higher Education (Montgomery) ....................................(334) 242-1998
Alabama Consumer Protection Agency (Montgomery) ...........................................(334) 242-7334
Alabama Cooperative Extension Service (Auburn)..................................................(334) 844-5323
Alabama Department of Aeronautics (Montgomery) ...............................................(334) 242-4480
Alabama Department of Agriculture and Industries (Montgomery) ........................(334) 240-7171
Alabama Department of Conservation and Natural Resources (Montgomery)........(334) 242-3486




                                                               21
STATE (Continued)

Alabama Department of Economic and Community Affairs (Montgomery)...........(334) 242-5100
Alabama Department of Education (Montgomery) ..................................................(334) 242-9950
Alabama Department of Environmental Management (Montgomery).....................(334) 271-7700
Alabama Department of Human Resources (Montgomery) .....................................(334) 242-1310
Alabama Department of Industrial Relations ...........................................................(334) 242-8003
    Workmen's Compensation Division (Montgomery)...........................................(334) 242-2868
Alabama Department of Information Systems (Montgomery).................................(334) 242-3244
Alabama Department of Public Health (Montgomery) ............................................(334) 206-5300
Alabama Department of Public Safety (Montgomery).............................................(334) 242-4371
Alabama Development Office (Montgomery)..........................................................(334) 242-0400
Alabama Film Office (Montgomery)........................................................................(334) 242-4195
Alabama Forestry Commission (Montgomery) ........................................................(334) 240-9300
Alabama Highway Department (Montgomery) ........................................................(334) 242-6356
Alabama Historical Commission (Montgomery)......................................................(334) 242-3184
Alabama House of Representatives (Montgomery)..................................................(334) 242-7600
Alabama Industrial Development Training Program (Montgomery) .......................(334) 242-4158
Alabama International Trade Center (Tuscaloosa) ...................................................(205) 348-7621
Alabama Labor Department (Montgomery) .............................................................(334) 242-3460
Alabama Legislative Reference Service (Montgomery)...........................................(334) 242-7560
Alabama Public Service Commission (Montgomery) ..............................................(334) 242-5218
Alabama Revenue Department (Montgomery).........................................................(334) 242-1170
Alabama Secretary of State.......................................................................................(334) 242-7205
Alabama Securities Commission (Montgomery)......................................................(334) 242-2984
Alabama Senate (Montgomery)................................................................................(334) 242-7800
Alabama Small Business Development Network (Tuscaloosa) ...............................(205) 348-1582
Alabama State Council on the Arts (Montgomery) ..................................................(334) 242-4076
Alabama State Docks (Mobile).................................................................................(334) 441-7100
Center for Business and Economic Research (Tuscaloosa)......................................(205) 348-6191
Commissioner of Insurance (Montgomery)..............................................................(334) 269-3550
Contractors Licensing Board (Montgomery)............................................................(334) 272-5030
The Work Force Development Division ADECA (Montgomery) ..........................(334) 242-5100
Engineers & Land Surveyors Registrars Board (Montgomery) ...............................(334) 242-5568
Geological Survey-Oil and Gas Board (Tuscaloosa)................................................(205) 349-2852
Governor's Office (Montgomery) .............................................................................(334) 242-7100
Lieutenant Governor (Montgomery).........................................................................(334) 242-7900
Liquified Petroleum Gas Board (Montgomery)........................................................(334) 242-5649
Register New Company Name (Montgomery) .........................................................(334) 242-5324
State Banking Department (Montgomery)................................................................(334) 242-3452
State of Alabama Foreign Trade and Relations Commission...................................(334) 433-1151
Sales Tax...................................................................................................................(334) 242-1490




                                                                   22
Associations:

Alabama Association of Independent Colleges and
   Universities (Birmingham) ..................................................................................(205) 252-6254
Alabama Association of Realtors (Montgomery) .....................................................(334) 262-3808
Alabama Association of School Boards (Montgomery)...........................................(334) 277-9700
Alabama Bankers Association (Montgomery)..........................................................(334) 834-1890
Alabama Broadcasters Association (Birmingham)...................................................(205) 979-1690
Alabama Climate Center (Huntsville) ......................................................................(256) 922-5800
Alabama Coal Association (Birmingham)................................................................(205) 822-0384
Alabama Concrete Industries Association (Montgomery) .......................................(334) 265-0501
Alabama Education Association (Montgomery) ......................................................(334) 834-9790
Alabama Grocers Association (Birmingham)...........................................................(205) 823-5498
Alabama Hospital Association (Montgomery) .........................................................(334) 272-8781
Alabama Hotel and Motel Association (Montgomery) ............................................(334) 263-3407
Alabama League of Municipalities (Montgomery) ..................................................(334) 262-2566
Alabama Poultry & Egg Association (Montgomery) ...............................................(334) 265-2732
Alabama Restaurant & Food Service Association (Birmingham)............................(205) 823-5498
Alabama Retail Association (Montgomery) .............................................................(334) 263-5757
Alabama Road Builders Association (Montgomery)................................................(334) 832-4331
Alabama Textile Manufacturers Association (Montgomery) ...................................(334) 279-1250
Alabama Travel Council (Montgomery) ..................................................................(334) 271-0050
Associated Builders and Contractors of Alabama (Birmingham) ............................(205) 870-9768
Association of County Commissions of Alabama (Montgomery) ...........................(334) 263-7594
Better Business Bureau (Birmingham) .....................................................................(205) 558-2222
Business Council of Alabama (Montgomery) ..........................................................(334) 834-6000
Manufacture Alabama (Montgomery) ......................................................................(334) 386-3000
Medical Association of Alabama (Montgomery) .....................................................(334) 263-6441
National Association of Women Business Owners (Birmingham) ..........................(205) 970-6316
National Federation of Independent Business (Montgomery)..................................(334) 264-2261
Southern Building Code Congress International (Birmingham) ..............................(205) 591-1853
Southern Growth Policy Board (North Carolina) .....................................................(919) 941-5145


NOTE:        If State Agency is not listed call the State Information Operator for assistance at
             (334) 242-8000. Websites for all state agencies are available at
             http://www.info.alabama.gov/




                                                             23
C. ACCOUNTING & RECORDKEEPING
For the individual just going into business, experience clearly indicates that an adequate
recordkeeping system helps increase the chances of survival and reduces the probability of early
failure. Similarly, for the established business owner, it has been clearly demonstrated that an
accurate recordkeeping system increases the chances of staying in business and of earning large
profits.

It is practically impossible to negotiate for a business loan from a bank without properly
prepared financial statements. It may even be difficult to secure credit in any form without
statements. Bankers and other credit grantors need to study the business owner's balance sheet
and income statement in order to decide whether credit should be extended. Sometimes audited
financial statements are required; the recordkeeping system must provide the basis for these
statements.

Requirements by federal and local government agencies of adequate records are as important as
the management and credit importance of financial statements. The responsibility for
maintaining records and proving their accuracy falls on the taxpayer. Federal and local income
taxes, payroll taxes, sales taxes, personal property taxes, and an increasing number of other laws
and regulations require certain reports which are easier to prepare and substantiate if the figures
are organized by a good recordkeeping system.

Records backing up government requirements must be available during the audit period. Record
retention will depend upon the statute of limitations set forth by local and federal law. It is
important to consult an attorney to determine the requirements of governing statutes. Due to the
cumulative volume of required records, storage and retrieval can become burdensome. Many
business owners are microfilming their old records and microfilming service centers are being
called on to solve this problem.

A number of "one-book" recordkeeping systems are available. Some are prepared with
instructions and forms designed for specific kinds of businesses, while others are for small
business use in general.

Some trade associations, manufacturers and wholesalers offer specially designed recordkeeping
systems to meet the general needs of a large variety of retail and service establishments. The
owners of a business will often find it desirable to obtain specialized assistance to help them
adapt such systems to their special requirements.

There are several copyrighted systems providing simplified records, usually in a simplified
record book. These systems cover the basic records with complete instructions for their use.

The Small Business Administration (SBA) has a publication, FM-10 "Record Keeping in a Small
Business," that lists many of these systems. Copies of this publication are available online at
http://www.sba.gov/idc/groups/public/documents/sba_homepage/pub_fm10.pdf.



                                                24
In order for a recordkeeping system to be useful it must be simple to use, easy to understand,
reliable, accurate, consistent and designed to provide information on a timely basis. To keep
effective records you must be able to:

          Identify the source of a receipt
          Keep track of all deductible expenses
          Figure depreciation allowance
          Take advantage of capital gain and loss laws
          Figure your earnings for self employment tax purposes
          Support items on your tax returns

There are four basic types of records that most firms keep:

          Sales records
          Cash records
          Cash disbursements
          Accounts receivable

If you do not have the necessary experience, it is recommended that you consider hiring a
certified public accountant to develop your recordkeeping system.

Public accountants also render other accounting services such as auditing, preparation of reports
for government agencies, tax planning, analysis of financial reports and a variety of specialized
management advisory services.

D. ACCOUNTING SYSTEMS
Accounting systems range from simple and inexpensive to costly computerized systems. Some
of the available options include the one-write system, a ledger less system for accounts
receivable and accounts payable, standard ledgers and journals, computerized accounting
systems, prepackaged services provided by banks and service bureaus, bookkeeping services and
accountants. With this wide variety of options it is important to choose a system that you can
understand and feel comfortable using.

The accounting system you choose should meet the needs of your business situation and at the
minimum meet the following objectives:

   •   The system should yield an accurate and precise picture of the operating results
   •   The records should provide a convenient basis for comparing current data with previous
       year's operating results and budgetary goals
   •   The financial data should be presented in a format that is useful to prospective creditors,
       bankers, auditors and management
   •   The accounting records should reflect losses such as theft and bad debt
   •   The accounting process should include compiling and filing reports and tax returns
   •   The accounting records should be able to substantiate the value of fixed assets for
       insurance claims, in the event of a loss
                                                25
   •   The United States Securities & Exchange Commission requires most publicly held
       corporations to file certain annual and interim quarterly reports

The accounting system you choose can be established on an accrual or cash basis. In a cash
system the accounts are debited and credited as cash is received and paid out. In an accrual
system, the income earned and the expenses incurred are recorded when the sale is made or
whenever the expense is incurred. The accrual basis of accounting allows the matching of
revenues and associated expenses. Due to this matching, the accrual basis is generally considered
to be a more accurate and up-to-date statement of profits.

E. INSURANCE
Some small business owners view insurance as if it were some form of tax. They recognize that
it is necessary but consider it burdensome. However, if used correctly, insurance can contribute
to the overall success of your business by reducing the uncertainties under which you operate. It
can also reduce employee turnover, improve your credit at the bank, make it easier to sell to
customers on favorable terms and help keep your small business going in case an insured peril
interrupts your normal business operations. The importance of good insurance management is
too important to overlook. Therefore, it is essential that you discuss your insurance needs with an
agent of your choice as early as possible.

Insurance Checklist

       Fire Insurance                                           Group Life Insurance
       Liability Insurance                                      Business Life Insurance
       Automobile Insurance                                     Group Health Insurance
       Workers Compensation                                     Disability Insurance
       Business Interruption Insurance                          Retirement Insurance
       Crime Insurance                                          Key Man Insurance
       Glass Insurance                                          Marine &/or Inland Marine
       Rent Insurance                                           Boiler & Machinery
       Employee Benefit Coverage                                Flood Insurance
       Aviation Insurance




                                                26
F. READINESS CHECKLIST
I.     THE SITE:                                                                                                                                Yes     No
       1. Have you decided on a location?..........................................................................................             _____   _____
       2. Have you found a good building? ........................................................................................              _____   _____
       3. Is it big enough to allow for growth? ...................................................................................             _____   _____
       4. Can people get to it easily? ..................................................................................................       _____   _____
       5. Do you have adequate parking available? ............................................................................                  _____   _____
       6. Do you have a proper sign?..................................................................................................          _____   _____
       7. Have you signed the necessary papers? ...............................................................................                 _____   _____
       8. Has a lawyer checked the lease and zoning?........................................................................                    _____   _____
       9. Are the utilities in line? ........................................................................................................   _____   _____

II.    EQUIPMENT AND OFFICE SUPPLIES:
       1. Do you have the necessary office equipment? ..................................................................... _____ _____
       2. Do you have a reliable source? ............................................................................................ _____ _____
       3. Can you afford to maintain proper levels of supplies and the up-keep of equipment? ........ _____ _____

III.   YOUR MERCHANDISE:
       1. Do you know precisely what will be sold?...........................................................................                   _____   _____
       2. Are you qualified to sell it? ..................................................................................................      _____   _____
       3. Can you afford the suppliers' prices? ...................................................................................             _____   _____
       4. Can the supplier provide the services you need?..................................................................                     _____   _____
       5. Do you know how to "merchandise" your goods? ...............................................................                          _____   _____
       6. Do you have the necessary inventory? .................................................................................                _____   _____

IV.    RECORDKEEPING:
       1. Have you planned a system of records for income, expenses, etc?......................................                                 _____   _____
       2. Have you worked out an effective inventory tracking system?............................................                               _____   _____
       3. Do you know how to keep payroll, tax, and payment records?............................................                                _____   _____
       4. Do you know what financial statements will be needed?.....................................................                            _____   _____
       5. Do you have an accountant, if one is needed?......................................................................                    _____   _____

V.     LEGAL RECORDS:
       1. Do you have all the necessary licenses and permits? ........................................................... _____ _____
       2. Do you know what business laws you have to obey? .......................................................... _____ _____
       3. Do you have a lawyer with small business expertise? ......................................................... _____ _____

VI.    PROTECTION:

       1. Have you made plans for protecting against both employee and customer theft? ............... _____ _____
       2. Have you talked with an insurance agent about all the kinds of insurance you need? ......... _____ _____

VII.   ADVERTISING:                                                                                                                             Yes     No
       1. Do you have a marketing plan?............................................................................................ _____ _____
       2. Do you know how you will advertise?................................................................................. _____ _____
       3. Can you afford adequate advertising? .................................................................................. _____ _____

                                                                             27
VIII.     PRICING:
          1. Do you know the selling price for each item to be sold? .....................................................                   _____   _____
          2. Do you know your competitor's price? ................................................................................           _____   _____
          3. Can you make a profit with the prices at which you intend to sell?.....................................                         _____   _____
          4. Do you have a pricing strategy for old merchandise or slow to sell merchandise?..............                                   _____   _____

IX.       BUYING:
          1. Do you have a plan for determining what your customers want? ........................................                           _____   _____
          2. Is it both workable and affordable?......................................................................................       _____   _____
          3. Do you have buying experience? .........................................................................................        _____   _____
          4. Do you have reliable suppliers? ...........................................................................................     _____   _____

X.        SELLING:
          1. Do you have a selling strategy?............................................................................................     _____   _____
          2. Can you afford the necessary staffing? ................................................................................         _____   _____
          3. Do you have a plan flexible enough to cover both the slow and peak times? ......................                                _____   _____
          4. Are you and your employees experienced in selling? ..........................................................                   _____   _____

XI.       EMPLOYEES:
         1. Have you hired the necessary staff? .....................................................................................        _____   _____
         2. Do they have the needed experience? ..................................................................................           _____   _____
         3. Have you set personnel procedures? ....................................................................................          _____   _____
         4. Do you have a benefits package? .........................................................................................        _____   _____
         5. Do you have a performance appraisal system? ....................................................................                 _____   _____
         6. Do you have a training program and procedure manuals for new employees? ....................                                     _____   _____
         7. Do you have an employee recruitment plan? .......................................................................                _____   _____
         8. Can you offer employees insurance coverage? ....................................................................                 _____   _____
         9. Do you know what the total salaries and benefits will equal?..............................................                       _____   _____
        10. Can you afford this figure?...................................................................................................   _____   _____

XII.      CREDIT:

          1. Will your customers have the option of buying on credit?...................................................                     _____   _____
          2. Have you arranged for the use of credit cards? ....................................................................             _____   _____
          3. Do you have a method for determining good creditors from the risky ones? ......................                                 _____   _____
          4. Have you set credit acceptance procedures for the staff to follow? .....................................                        _____   _____

XIII.     OTHERS:                                                                                                                            Yes     No

          1. Could you make more money working for someone else? ..................................................                          _____   _____
          2. Can you afford the loss if the business fails? .......................................................................          _____   _____
          3. Do you have a plan to repay debts?......................................................................................        _____   _____
          4. Does your family support you completely? .........................................................................              _____   _____
          5. Do you have the energy and time to run a business? ...........................................................                  _____   _____
          6. Do you have adequate funding? ...........................................................................................       _____   _____
          7. Will you need to mortgage your home or use it as collateral? .............................................                      _____   _____
          8. Do you have managerial experience in each aspect of your business? ................................                             _____   _____




                                                                            28
This checklist is an important tool in the planning of your new business. Each of these areas must be addressed by
the entrepreneur. By following this checklist, the business owner can deal with many of the problems that face a new
venture before they become major obstacles.

Serious consideration should be given to the viability of the venture if the entrepreneur has many questions that
cannot be addressed or rectified.




                                                        29
III. GUIDE TO BUSINESS TAXES
A.   Introduction to Business Taxes

B.   Taxes on the Business Itself

C.   Sales, Use & Business Taxes

D.   Property Tax

E.   Individual & Corporate Tax

F.   Employment Tax

G.   Tax Numbers

H.   Child Labor Provision


A. INTRODUCTION TO BUSINESS TAXES
State Taxes

Some of the most complex issues facing small business owners today are the various taxes and
tax structures. This section of “Alabama’s Answers” is devoted to business taxes. The following
business taxes are covered in this section.

Part B – Taxes on the Business Itself
Part C – Sales & Use Taxes
Part D – Property Tax
Part E – Individual & Corporate Tax
Part F – Employment Taxes

The remainder of this section discusses business licenses, vehicle licenses, tax numbers and
forms and child labor laws.

The definitive document for business taxes in the State of Alabama is the “General Summary of
State Taxes”, published by the Alabama Department of Revenue and available at the following
web address http://www.revenue.alabama.gov/gensum.pdf. In addition, the Alabama Department
of Revenue provides a publication entitled, “Starting a New Business – An Educational Brochure
for Alabama Taxpayers” available online by going to the following web address:
http://www.revenue.alabama.gov/taxpayerassist/Starting%20A%20New%20Business%208-09.pdf.

Throughout this section there will be links to web pages that give specific information about the
particular tax related topic that is being discussed.


                                               30
Federal Taxes

As an aid to taxpayers, the IRS provides through its irs.gov website the Small Business and Self-
Employed Tax Center at http://www.irs.gov/businesses/small/index.html. The site contains all of
the business tax forms, instructions, and publications needed by small business owners.
Additional information on various IRS topics of interest can be accessed utilizing the A-Z Index
for Business at http://www.irs.gov/businesses/small/index.html.

The IRS also routinely sponsors small business tax workshops through your local Small Business
Development Center (SBDC). To locate the center nearest you, go to the Alabama SBDC
Network website at http://www.asbdc.org.

B. TAXES ON THE BUSINESS ITSELF

Federal Taxes

Income from proprietorships, partnerships or other unincorporated businesses is subject to
individual income taxes of the owners using form 1040 with appropriate schedules. Incorporated
businesses are subject to U. S. corporate income tax laws. For further information contact:

    Internal Revenue Service
    Tax Information
    1-800-829-1040
    http://www.irs.gov


State Taxes

Like the federal income tax, the state also requires that income from proprietorships, partnerships
or other unincorporated businesses be taxed at the state individual income tax rate of the owners.
In Alabama, both foreign and domestic corporations are subject to a net income tax and Alabama
business privilege tax. The Alabama Department of Revenue - Sales, Use & Business Tax
Division is available to render assistance to taxpayers at its Taxpayer Service Centers located
throughout the State of Alabama, and at its Foreign Audit Section and Central Office located in
Montgomery. For more information contact the Alabama Taxpayer Service Center nearest you.
You can find the centers on the internet at http://www.revenue.alabama.gov/salestax/tpservcenters.html
and clicking on “Taxpayer Service Centers”.




                                                 31
C. SALES, USE AND BUSINESS TAX

   • Sales and Use Taxes:

The Alabama Sales, Use and Business Tax Division web page is located at
http://www.revenue.alabama.gov/salestax/index.html.

Every aspect of Alabama State Sales and Use Tax is discussed on this site. There is an excellent
FAQ (Frequently Asked Questions) section at http://www.revenue.alabama.gov/salestax/faq.html
which discusses e-commerce and mail order sales tax rulings, as well as information regarding
who collects and enforces the 37 different taxes in the state.

There are also links to informative web pages on specialty areas such as Business Licensing,
Motor Fuels, Severance Tax, Tobacco Tax and Electronic filing.

   •   Sales and Use Tax Forms: http://www.revenue.alabama.gov/salestax/stforms.html

       Alabama Revenue Department
       Sales, Use and Business Tax Division
       P.O. Box 327550
       Montgomery, AL 36132
       (334) 353-7827

D. PROPERTY TAX
The Alabama Department of Revenue, Property Tax Division administers property tax within the
state. The property Tax Division’s web page is http://www.revenue.alabama.gov/advalorem/index.html.

This division administers 11 types of state property taxes. The two most assessed property taxes
are the Ad Valorem Tax and the Corporate Shares Tax.

Ad Valorem (Property) Tax – Information on the advalorem tax rates for various “classes” of
property can be found by going to
http://www.revenue.alabama.gov/advalorem/other/Assessmentinformation.htm. This area
contains information on classes of property, property tax exemptions and county millage rates.
Property Tax forms are also available online.

Corporate Shares Tax – Information on this tax is also available on the Property Tax Division
web site. Click on “Operating Sections”, and then click on “Shares Tax”. Here you will find
complete information on the assessment of shares of a domestic corporation along with the
necessary forms for filing.




                                                32
E. INDIVIDUAL AND CORPORATE TAX
Alabama Business Privilege Tax - This tax is owed by all corporations, limited liability entities,
and disregarded entities which either are doing business in the State of Alabama, or are
registered with the Alabama Secretary of State’s Office to do business in Alabama.

The Alabama business privilege tax return and payment is due two and one-half months after the
end of the taxable year for corporations. The return and payment is due three and one-half
months after the end of the taxable year for non-corporate taxpayers, such as limited liability
companies.

Business entities are liable for the Alabama business privilege tax for each taxable year during
which the entity is in legal existence, regardless of the level of business activity. The Alabama
business privilege tax is based on the net worth of the business entity and is levied on business
entities by §40-14A-22, Code of Alabama 1975. Generally, the minimum business privilege tax
is $100.

Please contact the Alabama Department of Revenue, Individual and Corporate Tax Division at
(334) 242-9800 for more information or forward your correspondence to:

Alabama Department of Revenue
Individual and Corporate Tax Division
Business Privilege Tax Section
PO Box 327431
Montgomery, AL 36132-7431

Income Tax - This tax is on the entire net income of every individual and corporation domiciled
in Alabama, and of every non-resident deriving income from within Alabama. Income tax is
required to be paid throughout the year either by withholding or estimated tax. Withholding of
Alabama income tax is required by all employers. Whenever a new employee begins a new job,
he or she is required to complete a form A-4, Exemption Certificate, and file it with the
employer. The employer withholds Alabama Income Taxes on the basis of the information
furnished by the employee on this exemption certificate. If an employer fails to secure a
completed A-4 form from his employee, the employer must withhold Alabama Income Taxes on
the basis of no exemptions. A Federal form W-4 will not be recognized in lieu of a form A-4.
Every employer is required to secure completed exemption certificates from his employees, even
though he may not be required to withhold any Alabama income tax. Tax withheld is based on
withholding tables or the formula provided in the "State of Alabama Withholding Tax Tables
and Instructions for Employers" publication. Assignment of an Alabama withholding tax
number is required before an employer may submit Alabama Income Tax to the Department of
Revenue. Employers file an application for this withholding tax number. The taxpayer must use
this code number to identify all payments of Alabama withholding tax and include the number
on all correspondence concerning the business's income tax withholding accounts. A declaration
of individual estimated income tax is required of an individual who is subject to income tax if the
individual anticipates having income from sources other than wages.


                                                33
In the case of a single or married person filing separately having non-wage income of $1,500 or
more and in the case of a married person living with spouse and filing a joint return having non-
wage income of $3,000 or more, a declaration of estimated income tax is required. Domestic
corporations (corporations created or organized under the laws of the state of Alabama) must pay
a corporate income tax imposed on net income at the rate of 5%.

Foreign corporations (corporations created or organized outside the state of Alabama) pay this
tax at a rate of 5% also, and it is applicable to the net income from property situated within
Alabama and/or from business done and transacted in Alabama. Note: There are special rules
with respect to the apportionment of income in the case of foreign corporations having income
from both within and outside the state of Alabama. Please contact the Alabama Department of
Revenue, Individual and Corporate Tax Division at (334) 242-9800 for more information.

Useful Web Links:

   • Individual Income Tax Forms
     http://www.revenue.alabama.gov/incometax/ITformsindex.htm

   • Alabama Corporate Income Tax Forms
     http://www.revenue.alabama.gov/incometax/ITcorpfinaexcindex.htm

   • S-Corporation FAQ
     http://www.revenue.alabama.gov/incometax/scorporationfaq.html

   • Alabama Payroll Tax Forms
     http://www.revenue.alabama.gov/withholding/index.html

F. EMPLOYMENT TAX
Employment related taxes can generally fit into three categories: those taxes you must pay for
each employee, taxes you must withhold from each employee’s pay and workman’s
compensation insurance. Listed below are those taxes which are withheld from your employees’
gross wage or other expenses paid by the employer only.

Payroll Withholding Taxes

Federal Income Tax Withholding:

Contact: Internal Revenue Service
         Tax Information
         1-800-829-1040
         www.irs.gov

          You may also refer to Publication 15 (Circular E), Employer’s Tax Guide at the
          irs.gov website http://www.irs.gov/pub/irs-pdf/p15.pdf for more detailed information
          concerning federal withholdings.

                                               34
Social Security Tax (FICA)

Contact: Department of Health and Human Services
         Social Security Administration
         1-800-772-1213
         www.ssa.gov

         You may also order forms at this website or call the number listed above.

State Withholding Tax:

Contact: Alabama Revenue Department
         Withholding Tax Section
         P.O. Box 327480
         Montgomery, AL 36132-7480
         (334) 242-1300

         The Alabama Department of Revenue has a booklet entitled, “Withholding Tax
         Tables and Instructions for Employers and Withholding Agents”. The brochure
         contains tax tables and general instructions for computing, withholding, and remitting
         Alabama withholding tax. Detailed information and instructions are provided at:
         http://www.revenue.alabama.gov/Withholding/whbooklet_1209.pdf.

         Note: State unemployment tax and local occupational taxes are not administered by
         the Department of Revenue. You can obtain information concerning unemployment
         tax by writing to the Department of Industrial Relations, Unemployment
         Compensation Agency, Montgomery, AL 36131, or call 334-242-8830. To obtain
         information concerning local occupational tax, you must contact the city or county
         which is administering the tax.

         Please be aware that depending on your business’ physical location certain
         local withholding taxes may apply. You may wish to contact your local city
         government offices concerning such taxes.

Other Taxes and/or Expenses Paid by the Employer

Federal Unemployment Tax

Contact: Internal Revenue Service
         Tax Information
         1-800-829-1040
         www.irs.gov

         You may also refer to Publication 15 (Circular E), Employer’s Tax Guide at the
         irs.gov website http://www.irs.gov/pub/irs-pdf/p15.pdf for more detailed information
         concerning Federal Unemployment Tax (FUTA).

                                             35
State Unemployment Tax

Contact: Alabama Department of Industrial Relations
         Unemployment Compensation Tax Division
         649 Monroe Street
         Montgomery, AL 36131
         (334) 242-8830
         http://dir.alabama.gov/uc

Workmen’s Compensation Insurance

Contact: Alabama Department of Industrial Relations
         Workmen’s Compensation Division
         649 Monroe Street
         Montgomery, AL 36131
         (334) 242-2868
         http://dir.alabama.gov/wc

G. TAX NUMBERS

Federal Employer Identification Tax Number

Every person who pays wages to one or more employees and who has not previously secured an
identification number must file with the Internal Revenue Service for an employer identification
number. The application must be filed by those who wish to pay wages on or before the seventh
day after the date on which business begins. The federal employer identification number will
also be needed for use on Alabama tax forms.

To obtain a federal identification tax number contact:

          Internal Revenue Service
          1-800-829-3676
          Ask for form SS-4
          www.irs.gov

Alabama Sales Tax Number

Anyone who sells tangible personal property to an end user and collects sales tax must have an
Alabama sales tax number. To obtain an Alabama sales tax number contact:

          State Department of Revenue
          Central Registration
          P.O. Box 327790
          Montgomery, AL 36132-7790
          (334) 242-1490
           http://www.revenue.alabama.gov/taxpayerassist/com-101ff.pdf

                                                36
Alabama Income Tax Withholding Number

Any business that hires employees and pays wages needs an Alabama income tax withholding
number to hold and remit the taxes withheld to the Department of Revenue. To obtain an
Alabama income tax withholding number contact:

          State Department of Revenue
          Income Tax Division
          Withholding Tax Section
          P.O. Box 327480
          Montgomery, AL 36132-7480
          (334) 242-1170
          Ask for form COM 101
          http://www.revenue.alabama.gov/Withholding/index.html

Unemployment Compensation Tax Number

The unemployment compensation tax number is needed in the event that an injury is incurred by
someone in your company. This number is used for identification purposes when a report is filed
with the Department of Industrial Relations. To an obtain unemployment compensation tax
number contact:

                 Department of Industrial Relations
                 State of Alabama
                 Industrial Relations Building
                 Status Unit
                 649 Monroe Street, St. Room 416
                 Montgomery, AL 36131
                 (334) 242-8830
                 http://dir.alabama.gov/uc/

Two forms are needed:

   1) Form SR2 is used to obtain an unemployment compensation tax number.

   2) Form CR4 is used to report wages paid to employees.




                                              37
H. CHILD LABOR PROVISION
The minimum age for employment outside school hours is age fourteen. Sixteen years is the
minimum age for most employment, including many jobs in manufacturing. However, teenagers
may not work in jobs that have been declared hazardous by the Secretary of Labor until age
eighteen. In Alabama, persons under age twenty-one are prohibited from dispensing alcohol in
places where those beverages are served for consumption on the premises.

Teenagers under age sixteen may not exceed forty hours of work in a week during summer
vacation and not more than eighteen hours a week when school is in session. Also, during school
session, students who are under age eighteen may not work past 10:00 P.M. on nights preceding
a school day.

All teenagers under age seventeen who are employed must obtain a work permit for each job
they hold.

   •   For a summary of Federal Child Labor Laws see:
       http://www.dol.gov/elaws/esa/flsa/cl/default.htm

   •   Also a good reference on the Department of Labor site:
       http://www.dol.gov/dol/topic/youthlabor/safetyhealth.htm




                                              38
IV. SMALL BUSINESS ASSISTANCE
A. Alabama SBDC Network

     1.   Small Business Development Centers (SBDC)
     2.   Alabama Procurement Technical Assistance Center (PTAC) Program
     3.   Alabama International Trade Center (AITC)

B. Office of Small Business Advocacy (OSBA)

C. Alabama Tourism Department (ATD)

D. Office of Minority Business Enterprise (OMBE)

E. Department of Agriculture and Industry

F. Alabama Cooperative Extension Service

G. Minority Business Development Agency

H. Alabama Chambers of Commerce

I. Alabama Career Center System

J. Service Corps of Retired Executives

K. Environmental Protection Agency (EPA)

L. Occupational Safety and Health Administration (OSHA)

A. ALABAMA SBDC NETWORK
The Alabama Small Business Development Center Network (ASBDC) provides management
and technical assistance at no cost to existing and potential small business persons statewide.
This service is offered through a network of ten Small Business Development Centers (SBDC)
and two specialty centers, the Alabama International Trade Center (AITC), and the Alabama
Procurement Technical Assistance Center (PTAC) Program located at member universities
around the state. The Alabama SBDC Network is a funded in part through a cooperative
agreement with the U.S. Small Business Administration.

Small Business Development Centers are a resource where information, counseling and technical
assistance is provided to individuals who plan to start a small business or are presently operating
a small business. The centers also provide education and training opportunities on a wide range
of business topics and assist small businesses with access to capital and SBA loan programs.
For more information contact the SBDC nearest you. To find the center nearest you, go to
www.asbdc.org and click on the “Centers” button.

                                                39
ALABAMA PROCUREMENT TECHNICAL ASSISTANCE CENTER PROGRAM

The Alabama PTAC Program is a specialty center of the Alabama SBDC Network and assists
small businesses throughout Alabama to sell to the government. Services include:

   •   Notifying businesses of government procurement and bid opportunities.
   •   Counseling businesses on the procurement process and on marketing their products and
       services to the government.
   •   Training business owners at workshops on how to sell to the government
   •   Providing matchmaking opportunities for businesses to meet with purchasing managers at
       government agencies and prime contractors.

Through a cooperative agreement with the Defense Logistics Agency, the Alabama PTAC
Program counsels firms on doing business with the government. Areas of counseling include bid
package preparation, 8(a) and other minority certification programs, proposal preparation,
bonding and quality assurance.

Training seminars, held at locations throughout the state, teach business people about the
government market and bidding process. Larger procurement conferences provide small
businesses the opportunity to network with government agencies and prime contractors.

The Alabama PTAC Program operates a bid match delivery service and local counseling and
training assistance through Procurement Technical Assistance Centers at six locations in
Alabama based as SBDC offices. Any business in the state can request the free bid delivery
service. For more information about the bid-matching service, procurement counseling, or
training seminars and conferences, visit the Alabama PTAC Program website and contact a
PTAC counselor near you: www.al-ptac.org

ALABAMA INTERNATIONAL TRADE CENTER (AITC)

The Alabama International Trade Center (AITC) is a member of the Alabama SBDC Network,
operating as a specialty program to assist small businesses to increase international trade. The
Center was founded in 1979, as part of the University of Alabama’s outreach service to assist
existing industry. The mission of the AITC is to increase the level of export trade activity for
small businesses, thereby fostering development and expansion of the economy. Its goals are to:
1) serve existing industry on a confidential, one-on-one basis, 2) assist public and private
organizations with trade development by initiating joint projects, researching industries, and
targeting foreign markets, and 3) further the University’s mission of research and service by
focusing on practical international trade education and training.




                                               40
The AITC works on a one-on-one confidential basis to help small businesses enter and sell in
export markets. Services provided free of charge to small businesses include:

   •   Customized international market research to identify foreign customers
   •   Targeted export assistance and management training conducted on-site to help small
       business owners and staff learn the process of exporting
   •   Export trade financing to access private and public sector financing for export sales

The Center operates as a federal state partnership program with the U.S. Small Business
Administration, promoting the official SBA trade programs and export financing programs in
Alabama. The AITC is a partner with the Alabama Development Office, International Trade
Division and its Export Alabama network of export assistance programs for small business. For
more information visit the website: www.aitc.ua.edu

B. OFFICE OF SMALL BUSINESS ADVOCACY (OSBA)
The Office of Small Business Advocacy (OSBA) is a joint program of the Department of
Industrial Relations (DIR) and the Alabama Development Office (ADO). OSBA recognizes the
fact that small business means big business in Alabama. Small businesses are the basis of
America's prosperity and economic growth. The mission of the Office of Small Business
Advocacy is to aid, counsel, assist and protect in so far as possible, the interest of small business
concerns in order to preserve free competitive enterprise and maintain a healthy and thriving
economy in the State of Alabama.
The Office of Small Business Advocacy fosters the growth of Alabama's small operations by
giving them a variety of assistance. The office provides a central reference program and general
counseling service to assist small businesses. OSBA enlist the cooperation and assistance of
public and private agencies, businesses, and other organizations by disseminating information
about their programs and services and how startup and existing small businesses can participate
in, or make use of, those programs and services.
OSBA works closely with the Alabama Small Business Development Center Network (ASBDC),
the Alabama Department of Economic and Community Affairs’ (ADECA) Office of Minority
Business Enterprise (OMBE), as well as other groups around the state involved in the
development and expansion of small businesses.
For more information contact:

                  Office of Small Business Advocacy
                  Department of Industrial Relations
                  Industrial Relations Building
                  649 Monroe Street
                  Montgomery, AL 36131
                  (334) 242-0485 or 1-800-248-0033
                  http://www.alabamausa.org
                  http://dir.alabama.gov


                                                 41
C. ALABAMA TOURISM DEPARTMENT (ATD)
The Alabama Tourism Department (ATD) is a vital part of Alabama’s economic development.
As such, the impact of tourism, it‘s application to an area’s community development and the job
creation that the tourism industry spurs is noteworthy.

ATD, as mandated by the Legislature, is entitled with “exclusive power and authority to plan and
conduct all state programs of information and publicity designed to attract tourists to the State of
Alabama.” Its purpose is to promote travel to and through Alabama. It does this both nationally
and internationally.

ATD helps ensure that Alabama’s economy gains maximum benefits from tourism. More than
22.4 million travelers spent an estimated $9.3 billion in the state in 2008, supporting the jobs of
169,651 Alabamians.

 The ATD is eager to work with you in every way possible to attract more visitors to your
community and our state.

For further information, contact:

                       Alabama Tourism Department
                       401 Adams Avenue
                       P.O. Box 4927
                       Montgomery, AL 36103-4927
                       (334) 242-4169 or 1-800-ALABAMA
                       www.alabama.travel


D.   OFFICE OF MINORITY BUSINESS ENTERPRISE (OMBE)
The Alabama Department of Economic and Community Affairs’ (ADECA) Office of Minority
Business Enterprise (OMBE) is a component of the Governor’s Resources for Economic
Assistance Programs (REAP) unit. The OMBE provides certification to qualified minority and
women-owned businesses operating in Alabama. Cities, counties, prime contractors, federal
entities, consulting firms and others often contact the OMBE for a listing of certified minority
and women-owned businesses. Certification is free of charge and can be a significant benefit to
businesses competing for contracting and/or sub-contracting opportunities. Businesses interested
in state contracting are encouraged to register as a vendor through the Department of Finance
Division of Purchasing. In addition, the OMBE refers customers to resources for start-up as well
as existing business development. Minority and women-owned businesses are a considerable
source of employment and, therefore, play an important role in economic development in
Alabama.




                                                 42
For more information contact:

                      Office of Minority Business Enterprise
                      Alabama Department of Economic and Community Affairs
                      Center for Commerce Building
                      401 Adams Avenue, Suite 410
                      P. O. Box 5690
                      Montgomery, AL 36130-5690
                      http://www.adeca.alabama.gov/c15/ombe/default.aspx.

E. DEPARTMENT OF AGRICULTURE AND INDUSTRY
The Department of Agriculture and Industry supplies both information and technical support to
Alabama's farmers, businesses and consumers. In providing the services, the department acts as
a regulatory agency, a service agency and a consumer protection agency all in one.

As a regulatory agency, the department is responsible for the monitoring and enforcement of
laws and regulations dealing with meats, poultry, produce, nursery plants, pesticides, over-the-
counter drugs, gasoline and motor oils, and agricultural products from seeds to fertilizers. As a
service agency, it assists farmers and businesses with seed testing, farm legislation, market
reporting, animal and crop disease detection, analysis and prevention, pest detection and
eradication, foreign and domestic market development, farm law enforcement, research and
numerous other activities.

For more information contact:

                  Department of Agriculture and Industry
                  P.O. Box 3336
                  Montgomery, AL 36109
                  (334) 240-7171
                  http://www.agi.state.al.us

F. ALABAMA COOPERATIVE EXTENSION SERVICE
This service is provided through county agents living in the counties they serve. These agents
carry out the educational programs of the Extension Service on the local level.

The agents are able to provide answers to almost anything to do with agriculture, home
economics, 4-H and growth or community development. Through the actions of these agents, the
goal is to identify the strengths and weaknesses of the resources of the county and to set
reachable goals and workable plans for improvement. For more information visit the website:
http://www.aces.edu/




                                               43
The following are the area offices and phone numbers:

ACES Headquarters, Auburn University..................................................................(334) 844-5270
North Alabama District Office, Huntsville, AL........................................................(256) 372-4976
Florence Office .........................................................................................................(256) 766-6223
Scottsboro Office ......................................................................................................(256) 574-1005
Talladega Office........................................................................................................(256) 362-6187
Fisheries and Allied Aquacultures ............................................................................(334) 844-4786
Montgomery Office ..................................................................................................(334) 265-0233
East Alabama District Office, Auburn, AL ..............................................................(334) 844-5270
Mobile Office............................................................................................................(251) 574-8445
Marine Resource and Sea Grant Office, Mobile.......................................................(251) 968-7576

G. MINORITY BUSINESS DEVELOPMENT AGENCY
The Minority Business Development Agency (MBDA) assists minority business in achieving
effective and equitable participation in the American free enterprise system and in overcoming
social and economic disadvantages that have limited their participation in the past. MBDA
provides national policies and leadership in forming and strengthening a partnership of business,
industry, and government with the Nation's minority businesses.

Management and technical assistance is provided to minority firms on request, primarily through
a network of minority business development centers funded by the Agency. Specialized business
assistance is available to minority firms or potential entrepreneurs.

MBDA promotes and coordinates the efforts of other Federal agencies in assisting or providing
market opportunities for minority business, primarily through its affiliate network of Minority
Business Development Centers. The agency coordinates opportunities for minority firms in the
private sector through the funding of business and industry trade associations. Through such
public and private cooperative activities, MBDA promotes the participation of federal, state, and
local governments, and business and industry in directing resources for the development of
strong minority businesses. The agency also operates an Information Clearinghouse for catalogs,
publications, and other information for and about the nation's minority businesses.

For further information, contact:
                                                                        Alabama Minority Business Opportunity Center
                                                                                    4715 Alton Court
              Office of Public Affairs                                           Birmingham, AL. 35210
     Minority Business Development Agency                                             (205) 957-9779
             Department of Commerce                                              www.mbocalabama.org
         1401 Constitution Avenue, N.W.
              Washington, DC 20230                                       Alabama Minority Business Enterprise Center
                  1-888-324-1551                                                 450-A Government Street
 (Based on your location, your call will be routed                                   Mobile, AL. 36602
to the nearest MBDA Regional or District Office.)                                      (251) 433-2250
               http://www.mbda.gov                                             http://www.mbecalabama.org/



                                                                  44
H. ALABAMA CHAMBERS OF COMMERCE
The Alabama Chambers of Commerce are made up of members of the business community in
cities throughout the state. Each city has its own organization and each individual chamber
works to promote business opportunities in its area.

The Chambers of Commerce in each city rely on the business people in the community to make
this program the "community's business spokesman".

Some of the services that the Chambers of Commerce provides include economic development
services, governmental affairs services and community affairs services. These services combine
together to help make the business community stronger and more productive.

The goal of the Chamber of Commerce is to provide a focal point for able community leadership
to effectively encourage and work for economic growth in business and industry. The mission
will thereby enhance the quality of life, represent the interests and advancement of members and
promote responsible principles in the conduct of business and government.

To find the Chamber of Commerce in your area, go to http://www.chamberofcommerce.com/
enter the name of your city or county.

I. ALABAMA CAREER CENTER SYSTEM
The Alabama Career Center is a good place to begin your efforts to find qualified prospective
employees. There are over 100,000 active resumes that can be accessed by employers through
the state’s automated labor exchange called Alabama Joblink, (AJL). Employers have the option
to enter and manage their own job orders into AJL’s system at http://joblink.alabama.gov, or
seek Career Center staff assistance.

The Career Center system is the state’s one-stop for employers and job seekers offering
employment and training services with the ultimate goal of matching business and industry’s
labor demands with skilled workers. There are 43 Career Centers located throughout the state to
assist employers and job seekers. A listing of Career Centers can be found on AJL.

Employment services are paid for by employers through federal unemployment taxes. There is
never a fee charged to employers or applicants.

Some of the services are:

       Individual referrals - we refer applicants to you, including highly qualified veterans with
       specialized skills, experience and training.

       Recruiting by appointment - we screen applicants and schedule appointments for you to
       interview at your convenience.

       Recruiting at our offices - we provide space in our office for you to interview applicants.

                                                45
      Recruiting on location - we assist in processing the applicants at a location you designate.

      Application or resume review - we forward pre-qualified applications and/or resumes to
      you for your review.

      Applicant processing - you can direct all applicants to our office and we will screen and
      refer the best qualified candidate when you have an opening.

      Testing - professionally developed and validated tests including typing, shorthand, and
      aptitude batteries.

      Targeted Jobs Tax Credit - Employment Service will determine applicant eligibility for
      employers who wish to take advantage of elective tax credits available under Federal
      Revenue Act of 1978.

      Training and Educational Assistance – Incumbent Worker Training Program; On Job
      Training (OJT) Program

      Salary re-imbursement for eligible workers – Supplemental Employment Program
      through Alabama Department of Human Resources

      College tuition assistance for technical training

A Career Center is as close as your telephone and the AJL system as close as your PC. Whether
you select self-service or staff assistance, you the employer, makes the final selection of
qualified applicants referred.

For more information contact both:

                 Department of Industrial Relations
                 State of Alabama
                 Employment Service Central Office
                 649 Monroe Street
                 Montgomery, AL 36131
                 (334) 242-8003
                 https://joblink.alabama.gov/ada/

                 Governor's Office of Workforce Development
                 135 South Union Street
                 Montgomery, AL 36130-2130
                 (334) 293-4707
                 http://www.owd.alabama.gov




                                                46
J. SERVICE CORPS OF RETIRED EXECUTIVES
The Service Corps of Retired Executives (SCORE) is an organization that provides counseling to
businesses by individuals who have experience in a particular field but are now retired.

Counselors who have the experience that most closely parallels your needs will be assigned to
your case to help solve the problems you are facing in your business venture. These counselors
also have access to other retired executives that they can call on if additional counseling is
required. While these services can be quite valuable, they are free and all information that is
learned about your business will be kept confidential.

For more information contact the SCORE chapter nearest you. To find the center nearest you, go
to www.score.org.

K. ENVIRONMENTAL PROTECTION AGENCY (EPA)

Background

EPA is a regulatory agency created to protect and enhance the environment under the laws
enacted by Congress. It is the EPA’s responsibility to control and abate pollution in the areas of
air, water, solid waste, pesticides, radiation and toxic substances. The EPA is mandated to
mount an integrated, coordinated attack on environmental pollution in cooperation with state and
local governments.

Environmental Protection Agency                         Alabama Department of Environmental Management
Ariel Rios Building                                                  1400 Coliseum Blvd.
1200 Pennsylvania Avenue, N.W.                                   Montgomery, AL. 36110-2059
Washington, DC 20460                                                   (334) 271-7700
(202) 272-0167                                                     www.adem.alabama.gov
http://www.epa.gov/

Small Business Hotline: (808) 368-5888

This service helps small businesses understand and comply with EPA regulations. Also
available is the publication Doing Business with the EPA.

Other EPA Hotlines:

       Chemical and Emergency Preparedness ...........................................(800) 535-0202
       RCR Superfund Hotline....................................................................(800) 424-9346
       Pesticide Telecommunications Network...........................................(800) 585-7378
       Solid Waste Recycling......................................................................(334) 270-5644
       Plastic................................................................................................(800) 243-5790
       Cans...................................................................................................(800) 876-7274
       Foams................................................................................................(800) 944-8448


                                                               47
L. OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION
       (OSHA)
Occupational Safety and Health Administration offices oversee compliance with federal
workplace safety and materials-handling regulations. Assistance provided includes information
on maintaining a safe workplace and how to comply with OSHA regulations. For additional
information, go to http://www.osha.gov/ or call the number below for your area.

       OSHA Birmingham ..................................................(205) 731-1534
           Mobile ............................................................(251) 441-6131

V. SMALL BUSINESS FINANCING

   A. FINANCING OVERVIEW

   The Financing of a small business is normally the biggest obstacle that the entrepreneur has
   to overcome in the attempt to start a new business. Developing a sound strategy for
   obtaining the proper type and amount of financing is crucial for the long-term success of any
   business opportunity.

   There are many different types of financing options available to today’s entrepreneur and
   these options include both public and private sources. The discussion of available financing
   options that follows will look at some of the more viable options from which the
   entrepreneur may choose.

   B. FINANCING AGENCIES AND PROGRAMS

   Small Business Administration

   The U.S. Small Business Administration and its nationwide network of partners help millions
   of potential and current small business owners start, grow, and succeed. Resources and
   programs targeting small businesses provide an advantage necessary to help small businesses
   effectively compete in the marketplace and strengthen the overall U.S. economy. Through a
   number of programs, SBA offers assistance with starting a business, financing a business,
   contracting opportunities, and recovering from disaster. All SBA programs and services are
   provided on a nondiscriminatory basis. Visit SBA online for small business news, programs,
   and training: www.sba.gov

   The SBA offers loan guarantees to private sector banks under two primary loan programs
   called the SBA 504 loan program and the SBA 7a loan guaranty program. The three principal
   players in each of these programs are – the small business, the bank lender, and the SBA.
   SBA guarantees a portion of the loan and this reduces the lender’s risk of the borrower’s non-
   payment.




                                                         48
To qualify for an SBA guaranty loan program, a small business must meet the lender’s
criteria and the requirements of the specific SBA 504 loan program or the SBA 7a program.
Eligibility requirements, guaranty percentages, interest rates, fees, and use of proceeds vary
for each program and are subject to change. For the latest information, please refer to the
SBA website and contact your local banker.

SBA 504 Loan Program

The United States Small Business Administration (SBA) enables growing businesses to
secure long-term, fixed-rate financing for commercial industrial real estate and/or major
machinery and equipment through the SBA 504 Loan Program. The program is designed to
promote local economic development by helping healthy, growing businesses finance the
acquisition of long-term fixed assets, including land, buildings, and major machinery and
equipment.

The 504 Program gives small business owners access to the same low-cost, fixed-rate, long-
term financing that large businesses have through the bond markets. Start up businesses are
also eligible for this program.

SBA promotes this program through certified development companies (CDC). A CDC
financed project can be of any size, but the SBA backed portion of the loan is usually limited
to 40% or $2,000,000. For manufacturing businesses or projects achieving certain energy
goals, the SBA backed portion can go up to $4,000,000. The minimum debenture is $25,000
with typical projects ranging in size from $200,000 to $5 million.

Since most U.S. businesses meet the SBA definition of a small business, chances are
excellent that yours will too. To qualify for a SBA loan, your business must be owner
operated; for profit; an organized as a sole proprietorship, corporation, partnership or LLC;
have a business net worth below $8.5 million and net profit after taxes below $3 million in
the last two operating years. If your business exceeds these size standards, there are alternate
standards based upon number of employees or gross sales under which you may qualify.

The SBA 504 loan Program offers many benefits to small businesses. They include low
down payment (allowing the small business to preserve working capital), longer terms, and
larger loan amounts than may be available through a conventional loan. In many cases, the
borrower's down payment will be 10% of project costs (15% for businesses less than two
years old, and 15% for special purpose buildings; 20% if both). In addition, interest rates on
the SBA 504 Loan will be below market and the rate will be fixed for the loan term.

The process of obtaining this type of loan involves submitting a proposal to a certified
development company (CDC). They will in turn work with you and your bank or financial
institution in order to complete an SBA application. The loan application will then be
submitted to the CDC’s loan committee for final approval to send to SBA. Finance
Specialists from any one of the following five CDC’s will assist the small business in
packaging the loan application. Several of these CDC’s also provide 7a loan assistance.



                                             49
                          Certified Development Companies

    Agency                                                  Service Area

Alabama Community Development Corp.                           Statewide
ALACOM Financing
117 Southcrest Dr., Ste 395
Homewood, AL 35209
(205) 942-3360 or 800-239-5909
Contact: Diane Roehrig, President
www.alacom.com

Alabama Small Business Capital                                Statewide
1784 Taliaferro Trail, Suite B
Montgomery, AL 36117
(334) 318-8064
Contact: Angie Winter, Vice President
www.fbdc.net


Foundation Capital                                            Statewide
1500 1st Ave. N., Ste. B108
Birmingham, AL 35203
(205) 250-6380
Contact: Bob Dickerson, Executive Director
www.foundationcapital.biz

Greater Mobile Development Corporation                        Statewide
Business Innovation Center
1301 Azalea Rd., Ste. 201
Mobile, AL 36693
(251) 650-0826
Contact: Teresa Sands, Economic Dev. Coordinator
Email: gmdc@ceebic.org

Southern Development Council                                  Statewide
8132 Old Federal Rd
Montgomery, AL 36117
(334) 244-1801 or 800-499-3034
Contact: Dana Moore, Executive Director
www.sdcinc.org




                                          50
SBA 7a Loan Program

7(a) loans are SBA guaranteed loans for lenders who choose to participate with SBA in the
7(a) program. These lenders structure their own loans within SBA's guidelines and receive
up to a 75 % guaranty from SBA on a portion of this loan. The most attractive feature of the
7a loan program is that through its risk reduction to the bank, capital is made more accessible
to the business.

The SBA 7a loan proceeds can be used for working capital; refinancing existing debt;
machinery, equipment, fixtures, and furniture; expansion, renovation or construction of
facilities and leasehold improvements; land or building acquisition.

The 7a program loan terms are as follows:

Maximum Loan Amount
$2 million gross ($1.5 million guaranty)

Percent of Guaranty
Loans over $150,000 and up to $2 million (75%)
Loans up to $150,000 85% guaranty

Maximum Loan Maturity
Working Capital– generally 7 to 10 years
Equipment– up to 10 years (depending on the useful life of the equipment)
Real Estate– up to 25 years

Maximum Interest Rates
(Fixed or Variable)
7 years or less (Prime + 2.25%)
Over 7 years (Prime + 2.75%)

Additional SBA Programs

While the 504 and 7a type loans are the primary lending programs of the SBA, they do
provide a number of other programs. These additional loan programs include the:

   •   SBA Express                               •    Export Working Capital
   •   Patriot Express                           •    International Trade
   •   Community Express                         •    Microloans
   •   CapLines                                  •    Small Business Investment Company
   •   Surety Bond Guarantee

For more information on each of these loan programs please visit www.sba.gov.



                                            51
Also, as part of the SBA’s goal of helping to provide financing to small businesses, they license
financial organizations to act as Small Business Investment Companies (SBIC). These SBICs
are very similar to venture capital companies and are privately owned and managed. For more
information you can contact:

Alabama District Office
801 Tom Martin Dr, Ste. 201
Birmingham, AL 35211
(205) 290-7101
www.sba.gov/al

U.S. Department of Agriculture-Rural Development

The U.S. Department of Agriculture (USDA), through the Rural Development State Office
guarantees term loans to non-farming businesses in rural areas. The Rural Development does not
make direct loans under this program. The program offered by the USDA Rural Development is
similar to that offered by the SBA 7a program but is larger in scope. The USDA Rural
Development program offers guarantees up to 80% on loans between $750,000 and $10,000,000.
One stipulation of the program is that those businesses who apply for this type of loan must be
located in communities with populations under 50,000. Priority will be given to those
communities with populations less than 25,000.

This program allows fixed assets to be financed for up to 30 years; machinery and equipment up
to 15 years; and working capital up to 7 years. The USDA Rural Development requires existing
businesses to provide 10% tangible balance sheet equity and new businesses must provide 20% -
25% tangible balance sheet equity. Due to the fact that this is a public program, job creation and
retention are priorities.

Another program that the USDA Rural Development offers is a program aimed at communities
that provide low interest loans to finance water and waste infrastructure and other essential
community facilities such as fire, rescue and public safety; health services; and community,
social and cultural services. The interest rates for this program are based on the community's
median family income.

The USDA Rural Development has a relatively new community program guaranteed program.
Under this program a guarantee will normally not exceed 80%; and loan purposes are the same
as community program insured loans.

For information on this financing opportunity, contact:

               USDA Rural Development
               Sterling Center, Suite 601
               4121 Carmichael Road
               Montgomery, AL 36106-3683
               (334) 279-3400
               http://www.rurdev.usda.gov/al


                                                52
Private Financing

The major source of private financing is direct bank loans. These are loans that are negotiated
directly with a bank and the terms of the loan are based on the bank's requirements.

The key to successfully obtaining a loan of this type is to be fully prepared before you ever even
talk to a banker. This preparation includes writing a detailed and accurate business plan. A good
business plan tells the banker you are fully prepared to enter into this business opportunity and
will increase his faith in you and your ability to make a success of the business.

It is estimated that 90% of all the prospective borrowers that come to a bank for a loan are not
prepared. Since bankers do not have the time to do the research for the borrower, it is safest and
easiest for them to say no. The following is a list of suggestions to help increase your chances of
getting a loan:

          Prepare the detailed business plan complete with financial statements.
          Pick a bank that has a reputation for making small business loans.
          Make an appointment to meet with the banker. Do not just walk in.
          Demonstrate your good character to the banker. This is one of the most
          crucial deciding factors.
          Know what type of loan you want and how much of a loan you will need.
          Be prepared to personally guarantee the loan or meet certain equity requirements.
          Be honest with the banker and answer all questions openly and honestly.

Personal Savings

Another widely used source of funds is the savings of the entrepreneur. These savings and those
of other family members are a viable source of funds and show future creditors that the owners
of the business are willing to personally stand behind their business. This type of faith is what
banks and other creditors like to see before lending money to any small business operation.

Another advantage to financing a business through personal or family savings is the fact that it is
less risky than bank financing and it is also less costly. Reducing risk and expenses early in the
life of a business are two factors that help to insure the long run success of a business. For these
reasons this financing option should be given every consideration.

Personal budgeting experience is another factor that bankers look for when they evaluate a
person's loan potential. Those people who demonstrate that they can set up and follow a personal
budget impress the banker as having the skill and experience necessary to develop and follow a
budget for a business, which is a critical factor in the success or failure of a business.

Due to the fact that budgeting is such an important part of the business cycle, it is recommended
that anyone considering opening a business should develop a personal budget simply because it
is good experience and bankers are impressed with those people who have budgeting experience.




                                                53
                       A joint publication of




 ooooooooooooooooo



Office of Small Business Advocacy                    Alabama Small Business
Department of Industrial Relations                 Development Center Network
   Industrial Relations Building                    Office of the State Director
     Montgomery, AL 36131                           The University of Alabama
(334) 242-0400 or 1-800-248-0033                            Box 870396
      www.alabamausa.org                              Tuscaloosa, AL 35487
      http://dir.alabama.gov                              (205) 348-1582
                                                         www.asbdc.org




                              Alabama Tourism Department
                                    401 Adams Avenue
                                      P.O. Box 4927
                              Montgomery, AL 36103-4927
                           (334) 242-4169 or 1-800-ALABAMA
                                   www.alabama.travel

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:10
posted:8/13/2011
language:English
pages:55